Research On The Impact Of The Business Environment On The Foreign Direct Investment

In the context of weak economic growth,all economies are adopting active policies to attract foreign investment,and the “business environment” of the economy is the first consideration when foreign investors conduct cross-border investment.In 2003,the World Bank measured the level of the business environment of the economy through the database of business environment projects,providing direction for the economy to reform the commercial regulatory environment.Governments have put a lot of effort into improving the commercial regulatory frame work with the aim of making the business environment more convenient to attract foreign capital inflows.Then,whether the reform according to the World Bank’s measurement project can effectively improve the level of foreign capital inflow and whether the impact effect is significant are worth studying.And in order to attract foreign direct investment(FDI)inflows,it is critical that the government focus on which business environment projects.This paper starts with the measurement method,measurement index of the business environment and FDI inflow theory,and then uses the statistical description method and comparative analysis method to analyze the current situation of FDI and business environment.In order to quantitatively study the relationship between business environment and FDI,this paper uses 13 years of data from 24 countries.Then study the relationship between the nine project indicators measuring the business environment and FDI.Through this research,it is found that when using the overall indicators of the business environment,the higher the level of the business environment of an economy the more helpful it is to attract FDI inflows.From the regression results of the control variables,the more the country has a higher GDP growth rate,the more it can attract foreign direct investment;The higher the level of labor freedom in a country,the more it can promote foreign-invested enterprises to conduct cross-border investment;When the economy’s government clean-up index is better(the country’s institutional environment is relatively perfect)the country is more attractive with the higher the level of FDI inflows;When the macro tax burden level is too high,it will reduce the enthusiasm of foreign-funded enterprises for cross-border investment and have a negative impact on FDI inflows.When studying the nine project indicators for measuring the business environment,it was found that the six indicators of dealing with construction permits,registering property,paying taxes,getting credit,enforcing contracts and resolving solvency have a significant positive effect on FDI.Therefore,this paper believes that in the process of commercial regulatory environment reform to attract FDI inflows,we can focus on these indicators for substantive reform.